COMPANY History: History: 1947: Klaus Obermeyer, a German immigrant began teaching at the Aspen Ski School ³Skiing is a celebration of life´ Klaus Obermeyer COMPANY History: 1985: Obersport; a joint venture in Hong Kong, the company began to increase productivity to meet their new demands. COMPANY Network: Recently, a number of contractual ventures were added and a new complex in Lo Village Guangdong China PRODUCT & Segmentation: Segmentation: PRODUCT Variety: . SUPPLY CHAIN Process: Textile and Raw Accessories Materials Suppliers Apparel Manufactures Obersport Finished Retailers goods The Obermeyer supply chain stretches from Asia to Aspen . Sample Production Design Process begins Las Vegas Concept Show Finalise Sketches sent Designs to Obersport Finalised Nov 92 Full Mar 93 scale Apr 93 .Jul 93 production Additional orders received Dec 93-Feb 94 Place 1st Production Las Vegas Order with Obersport Show Replenishment orders received .PLANNING & Production Cycle: Cycle: Feb 92 Mar 92 May 92 Jul 92 Sep 92 Prototype. Custom (JP) 90+ days 30 days 15 ± 30 days 1 ± 2 months 15 ± 30 days . Snaps (undyed) Dyeing of Snaps 6 weeks Consumer Procurement lead time 45 ± 90 days 45 ± 60 days 45 ± 60 days 2 ± 3 weeks Standard (HK) 60 days. etc.PRODUCTION Process: Asia Fabric Producer Cut/Sew Factory 6 wk Fabric Dyer Denver Warehouse 6 wk Retailer undyed greige goods Components Greige Shell Fabric Finishing of Shell Fabric (Dying & Printing) Finished Lining Fabric Insulation Zippers Thread Logo Patches. Hang Tags. Drawcords. ORDERING & SHIPMENT Process: 6 weeks Factories in Hong Kong Order 20% in Apr-Jun 93 Seattle warehouse Order 80% in Mar 93 Denver warehouse Forecasts Retailers order in Apr-Jun 93 800 Ski Retailers Product Sketches Forecast Committee . SALES & REPLENISHING Process: Aug 92 Sep 92 Oct 92 Nov 92 Dec 92 Sales Feb 93 Peak Sales Stock outs (+24 % of whole sale price) (+24 ReRe-Sales Market downs( -8% of wholesale price) . . 1. make a recommend for how many units of each style Wally should make during the initial phase of production. 10. Using the sample data given in Table 3-19 . Assume that all of 10 styles in the sample problem are made in Hong Kong and that Wally¶s initial production commitment must be at least 10.000 units. Ignore price differences among styles in your initial analysis? . What is the difference (If any) between the two initial production commitments? . Repeat your methodology and assume now that all 10 styles are made in China.3. 1. & 3. Comparison units of each style when produced in HK and China . Differences between production in HK and China Inventory Total Cost Operation Time Quality (% Repair) . & 3. The differences between production in HK and China .1. .2. Can you come up a measure of risk associated with an your ordering policy? This measure should be quantifiable. What¶s the result if demand forecasting uncertainty? -Stock outs (-24 % whole sale price) (-Market downs( -8% of wholesale price) -(Old) designs -High inventory holding cost -Unable to fully profit from hit products . Why does risk happens ? Forecasts are always uncertain Standard deviation Standard deviation Demand Average . Based on historical data .Variability of demand .Past forecast error .How can we assessing forecast certainty? 1 . 2.each member of the purchasing committee produces his/her own forecast . Obermeyer¶s Buying committee . Rather than producing one joint forecast . 3. The deviation in views is good estimator of forecast reliability Table of standard deviation vs Coefficient of variation . Using Early production Capacity (Speculative capacity) (Speculative for Assoult and Seduced .Reserve later production Capacity (reactive capacity) for Daphne and Anita as demand become more apparent .4. How is this information helpful ? ³Risk ±based production planning´ . What operational changes would you recommend to Wally to improve performance? .4. KEY Problems: Ski Clothes is fashionable product. Its life cycle is short Long time of planning and production activities Uncertain forecasting due to customer demand Fashion taker >> No R&D . . To create promotion strategy to persuade retailers to order.OPERATIONAL Changes: Reducing number of styles handled and to predict customer demand for individual style. OPERATIONAL Changes: Production system Increasing production Quality of China to be closed to Hong Kong. . To reduce lead time of production especially the preparation of raw materials. Lead time reduction Asia Fabric Producer Cut/Sew Factory Denver Warehouse Fabric Dyer Retailer undyed greige goods Consumer Sport Obermeyer Fabric dyer lead time of several months Dyer has long lead time on greige goods and needed to keep their capacity utilized year round but can change colors overnight Obermeyer can predict total annual sales and sales of basic colors. but can t predict fashion colors . Solution: Offer dyer one year commitment on greige goods and capacity Dye basic colors early in year and fashion colors late in season on few days notice . OPERATIONAL Changes: Supply chain system Increasing bargaining power with suppliers by ordering via big supplier that can commit on timeline To collect stock raw materials which is base on Ski cloth production . OPERATIONAL Changes: Increasing distribution channel to a country that have different period of product usage Increase services level requirements Establish DC in Seattle to reduce lead time and cost from inland transportation from Seattle to Denver . Original distribution process Seattle Hong Kong Establish Distribution Center in Seattle without through Denver . . Expedition of data and information and utilize historical data / Committee forecasting / Research and Trend & Market Movement.OPERATIONAL Changes: Information system Collect the data backward and analyze the demand of the show in Vegas and compare with actual purchase. How should Wally think (both short term and long term) about sourcing in Hong Kong versus China? What kind of sourcing policy do you recommend? .5. Lo Village) ± Lower labor cost ± Larger lot sizes Concern ± Smaller lot sizes ± Higher labor cost Concern ± Quality & Reliability ± Slower ± Less flexible .Production Options Hong Kong ± Faster ± More flexible ± High / Reliable Quality China (Guangdong. Where is better? Short term Long term Hong Kong China . Thank you Klaus Obermeyer . Women¶s Collection . Young¶s Collection Dharma Jacket .51103 . Competitors The Jacobs Corporation founded by David L. Jacobs Biography . Competitors The North Face. : subsidiary of VF Corporation . Inc. Competitors Burton Snowboards founded by Jake Burton Carpenter Innovative Burton outerwear performance meets leading Motorola Bluetooth ® technology . Alpine Ltd Hong Kong Macau China Other subcontractors Lo Village . Obersport Ltd.Manufacturing Structure: Sport Obermeyer Ltd. Cut. receive production orders and materials from Obersport. supply insulation. dye and print shell and lining fabrics. thread. zippers. logo patches and snaps. Responsible for material and production sourcing in the Far East. Apparel Manufacturers Subcontractors. . sew and final assembly. Obersport Sport Obermeyer Retailers Purchase from Sport Obermeyer and sell products to consumers.The Supply Chain Textile and Accessories Suppliers Produce. Product design. production planning and sales. It also acts as a distribution centre for materials and finished goods. Obermeyer¶s planning calendar . Product Transportation products made in June and July were transported by ships Hong Kong Warehouse Seattle then transported by trucks goods produced in August were air-shipped Obermeyer¶s Denver Warehouse Cost $5 per parka orders were finally shipped via small-package carriers such as UPS at the end of August 1993 Retailers . Retailers Delivering products by early September Specialty SkiRetail Stores Most sales occur between September and January Sport Obermeyer Department Stores Consumers Direct Mail Retailers . SUPPLY CHAIN Management: 1992 Apr Jul Oct Dec Jan Apr Munich show & Las Vegas show 1993 Jul Oct Dec Peak Sales Jan Committee forecast Design process Ordering process I Approved Ordering process II Production Shipment Production Process I process Process II Replenishing process II 1994 Jan Apr ReRe-Sales Jul Original planning & production cycle . SUPPLY CHAIN Management: 1992 Apr Jul Oct Dec Jan Apr Munich show & Las Vegas show 1993 Jul Oct Dec Peak Sales Jan Committee forecast Data Analysis & Research IS (Trend / Movement) Design process Forecasting I Ordering process I Approved Forecasting II Ordering process II Production Shipment Production Process I Process I Process II Replenishing process 1994 Jan Shipment Process II Forecasting III ReRe-Sales Apr Jul Recommended planning & production cycle .